Rethinking Your Business’ Insurance: The Captive Option

August 30, 2021

The COVID-19 pandemic has impacted many facets of our life and forced us to rethink what we consider normal. There have been many things we have had to change about our lives over the course of the pandemic.



From an insurance perspective, the last couple of years have seen hardening markets – i.e., the commercial markets have increased rates at a brisk pace. In many cases, the increases are not based on a group’s claims experience, but rather are driven by market forces. Given the increasing cost of insurance, many employers have been looking at options to help control insurance costs. Captive insurance has been a great option.  



With that in mind, it’s no wonder that captive insurance has experienced its greatest growth during the pandemic.



One advantage of captive insurance – be it for health insurance or property and casualty (P&C) – is the degree of transparency it provides its members. Captives help participants understand the various components of insurance and provide a clear mandate for the costs of the program. Most importantly, captives make it possible to generate savings by recapturing “excess” premiums paid to commercial markets. There are many advantages and nuances to a captive program, and we look forward to discussing them in more detail in our upcoming webinar on September 16.



Captives can help organizations with substantial cost savings, ranging between 5% to 50% on the basis of a variety of factors including lines of risk and captive program structure. In addition, captive programs stabilize member organizations’ insurance expenditures by creating greater predictability of future claims and afford them greater control over benefit offerings that attract and retain employees.



If your business is facing increasing cost of insurance and is looking for a sustainable solution, the question likely isn’t “Should we consider moving to captive insurance?” but rather, “Why haven’t we?”



Answering Your Captive Insurance Questions



On Thursday, September 16, Alera Group will focus on captive insurance and health benefits during a one-hour webinar, “Using Captives to Get Control of Your Benefits Spend: Optimizing Your Health Plans.”



Joining me for the presentation will be some of our Alera Group teammates who have many years of experience with captives and are leveraging unique solutions to help their clients navigate these trying times.



In addition to gaining an overview of captive insurance – including its challenges, as well as its advantages – participants will be eligible for continuing education (CE) credits from the Society for Human Resource Management (SHRM). To register, click on the link below.



REGISTER



To learn more about captive insurance and how it can help your organization achieve its goals, join us for our September 16 webinar, or simply contact Alera Group.



 



About the Author



Prabal Lakhanpal

Vice President

Spring Consulting Group, an Alera Group Company



As vice president of Spring Consulting Group, Prabal Lakhanpal provides technical and business inputs in the areas of employer-sponsored and voluntary employee benefits, product development, technology solutions and risk-funding solutions, as well as captive insurance. He undertakes strategic projects to help find innovative solutions for clients of a variety of industries, sizes and functions. Prabal joined Spring Consulting in 2015 after earning his master's degree in business administration from Babson College. He is also a graduate of the University of Delhi. Prior to joining Spring Consulting Group, he worked at a consulting firm that advised on finance, tax and legal advisory. He has worked as a consultant and adviser to clients in various industries and sectors.



Contact information:



The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the firm, our lawyers or our clients. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. Barrow Weatherhead Lent LLP is not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions. © 2023 Barrow Weatherhead Lent LLP. All Rights Reserved.

About Alera Group 

Alera Group is an independent, national insurance and wealth services firm with more than $1.1 billion in annual revenue, offering comprehensive employee benefits, property and casualty insurance, retirement plan services and wealth services solutions to clients nationwide. By working collaboratively across specialties and geographies, Alera Group’s team of more than 4,000 professionals in more than 180 locations provides creative, competitive services that help ensure a client’s business and personal success. For more information, visit https://aleragroup.com/ or follow us on LinkedIn.